Affordability and stability are reasons homebuyers choose a 30-year fixed rate mortgage. It makes the payment lower than a 15-year mortgage and the principal and interest portion of the payment will be constant for 30 years.
A common belief among homeowners for decades was that they would always have mortgage payment. The Great Recession has caused many individuals to rethink that concept and make plans to get their home paid for sooner.
For people who can afford it, shorter term mortgages will provide a lower interest rate and build equity faster. A 3.09% 15-year fixed-rate mortgage compared to a 3.87% 30-year loan will have a $562.42 higher payment.
The equity would be $66,903.04 greater on the 15-year term at the end of seven years. Even after you consider the higher payment on the shorter term, the equity difference is still almost $20,000 greater.
By choosing a 15-year loan, a borrower is committing to the higher payment for the term of the mortgage in exchange for a slightly lower interest rate. Another approach would be for the borrower to acquire a 30-year mortgage and make payments as if it were on a 15-year term. The slightly higher rate would allow the borrower the flexibility of not having to make the higher payment in the event he could not afford it on any particular month.
Author:Melissa Hardman Phone: 319-269-0304 Dated: November 12th 2015 Views: 4,577 About Melissa: ...
My name is Carl Ericson and I am a REALTOR with Oakridge Realtors in Cedar Falls, Iowa. I am in my eleventh year as a REALTOR. I work in Cedar Falls, Waterloo, and surrounding communities including Waverly, Hudson, Dike, Denver, and Evansdale.
I specialize in residential sales, investment properties, and new construction. Through hard work, experience and knowledge I become my clients real estate consultant. I helps my clients make sound real estate decisions and consult with my clients when they are contemplating a future real estate move.
I graduated from the University of Northern Iowa with a B.A. in Management: Business Administration and a Real Estate minor. I was involved with Rho Epsilon real estate club while I attended the University of Northern Iowa.
I have called the Cedar Valley home since 1987. I grew up in the area and believe that the Cedar Valley is truly a great place to live. I believe the Cedar Valley offers many features for people to enjoy including: arts and entertainments, sports, recreation, shopping, quality jobs, a great atmosphere, and much more.
If you are thinking about a real estate move, please contact me for a personal consultation.
Carl Ericson | Realtor®
Licensed in Iowa | #S43269000
Oakridge Realtors | 3313 Terrace Drive, Cedar Falls, Ia 50613